Bank risks to SMEs on energy smart projects can be part guaranteed

New Delhi, April 28 (KNN)If banks provide loans to SMEs and other industries for financing energy efficient projects, their risks can partially be covered under a scheme of the National Mission for Enhanced Energy Efficiency (NMEEE).

The scheme is called Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE) under NMEEE of the Bureau of Energy Efficiency (BEE).

PRGFEE is risk sharing mechanism to provide commercial banks with a partial coverage of risk involved in extending loans for energy efficiency projects.

“Under NMEEEE, BEE has set up a PRGFEE to provide commercial banks with a partial coverage of risk involved in extending loans for energy efficiency projects,” said BEE.“PRGFEE supports energy efficiency projects in government building, municipalities, SMEs and industries,” it added.

In order to implement various activities under PRGFEE, BEE has sought for implementing agencies which should be a Public Financial Institution in India.

The guarantee provided by the fund directly supports financing of energy efficiency projects by - addressing credit risk and barriers to structuring the transactions involved in financing energy efficiency projects; and engaging commercial financial institutions and building their capacity to finance energy efficiency projects on a commercially sustainable basis.PRGFEE acts as a first-loss and subordinated recovery guarantee, placed in a guarantee reserve account and paid out to participating banks in the event of loss or default in energy efficiency projects.

BEE is an agency of the Government of India, under the Ministry of Power, which works to develop programs to increase the conservation and efficient use of energy in India.